Privatization of PIA to Qatar Airways completes by March 2016

Eurasia News

Privatization of PIA to Qatar Airways completes by March 2016, say sources


Karachi, Pakistan: The process of privatization of Pakistan International Airlines (PIA) has entered into final stage to complete the process of privatization by March this year —the date set under a commitment given by the government of Pakistan to the International Monetary Fund (IMF).

Sources suggest that Qatar Airways Company Q.C.S.C has expressed its interest to buy PIA and appointment of German citizen Hayden Berg this week as Chief Operating Officer (COO) of PIA is linked with the process of due diligence of PIA. However, government denies this and calls such information baseless and unfounded.

PIA union claims that new COO is working on the behalf of Qatar Airways Company to evaluate financial health and liabilities of PIA while Government of Pakistan claims that new COO is working as an employee of PIA at a monthly salary of around 25,000 $ and his terms and conditions of his appointment include to modernization of PIA.

Privatization of PIA to Qatar Airways completes by March 2016

Nation-wide protests of PIA employees are continued and two PIA employees were allegedly killed by police in Karachi last week. However, protests have not been called off despite the fact that pilot association PALPA has decided to resume duties for air operations.

Pakistan government believes that it has given the task to new COO to transform PIA into a profitable entity. Official spokesperson for the national airliner, Danial Gillani confirmed the appointment of Berg. Meanwhile, employees claim that Berg has been sent by Qatar Airways for the process of due diligence.

The Joint Action Committee of PIA employees came out on the roads and suspended flight operations and took out protest rallies to stop privatization while government clamped PIA under “Essential Services Act” to ensure operations. Under Essential Service Act, employees have no legal right to suspend service and if they do then government has official right to arrest them and try them in courts.

It may be mentioned that PIA is a government entity with a fleet of 34 planes and over 16,000 regular and around 3,000 contractual employees. It operates only 24 domestic destinations and 34 international destinations. PIA has been a burden on publich exchequer since decades is running losses that sometimes increase to over Rs3 billion per month.

Privatisation of PIA is on card since last one decade but process had been halted on political will of previous governments to avoid political chaos and unemployment.

Financial experts including former federal finance minister Dr Salman Shah believes that there is no other solution than the privatisation of PIA. He believes that government can not afford to pump billions of dollars to run PIA annually.

Experts believe that restructuring of PIA needs at least four billion US dollars because it is impossible to come out from losses without increasing airplanes (fleet) that is only 35 planes at the moment which are being used to earn business for 19,000 employees. This situation is “Mission Impossible” for any administration to come out from financial crises.

It may be mentioned that government of Pakistan gave a commitment to the International Monetary Fund (IMF) to sell out PIA by March 2016. This commitment was linked with release of IMF financial support to Pakistan for its $6.6-billion Pak-IMF programme.

It was decided in IMF-PAK eight review of release of money that Pakistan will sell minimum 26% of PIA shares in first phase to one strategic investor.

Meanwhile, PIA employees claim that only 16% of the PIA revenue is spent on its employee’s salaries. They claim only two bail-out packages were given to the PIA including one in year 1971 and other recently to purchase new aircrafts. Employees claim that PIA is paying a tax of Rs 8.5 billion annually and its (PIA) assets are now worth Rs 700 billion and PIA provides direct and indirect employment to some 125,000 people.

Moulvi Iqbal Haider on Saturday moved the Sindh High Court (SHC) challenging planned privatisation of the Pakistan International Airline (PIA) and execution of Essential Service Maintenance Act, 1952.